Merck ($MRK) has landed a priority review for its top drug prospect, the PD-1 cancer drug MK-3475, giving the FDA a deadline of October 28 for making the first big marketing decision on a new wave of immuno-oncology therapies that is expected to be a game changer in the oncology market.

The looming PDUFA date for MK-3475 in melanoma--a drug that's won the FDA's breakthrough designation, promising a speedy regulatory review--puts Merck on track to gain the first market entry in the field, beating out the star team at Bristol-Myers Squibb ($BMY), which has been dogged by questions about its slow timing on the rival nivolumab.

Merck badly needs these bragging rights. The company has been pushing through a major reorganization, shedding thousands of research jobs after a years-long drought on major new drug approvals. Just days ago Merck had to acknowledge that vintafolide, heralded after an accelerated entry into Europe, failed its pivotal study, making MK-3475 more important than ever to its future.

Soon after his arrival last year, new R&D chief Roger Perlmutter quickly zeroed in on MK-3475 as a top prospect with wide-ranging cancer targets, and he's made the development program a top priority, racing through studies on the way to the FDA. Merck also said today that it will be filing for an approval in Europe before the end of this year.

Merck R&D chief Roger Perlmutter

In his R&D review today, Perlmutter spelled out plans for gaining a slate of new drug approvals and fresh filings this year. The twice-rejected anesthesia drug sugammadex is once again back on track, Perlmutter told analysts today, as is the long-delayed osteoporosis drug odanacatib. At one point odanacatib was the closely watched drug in Merck's late-stage pipeline. Today the company flagged an increased risk of atrial fibrillation and stroke in the Phase III data, raising questions about its long-term prospects. And then there's the sleep drug suvorexant, which Merck has had to refile with a lower dosage, limiting its commercial potential.

Trouble with all of those drugs, though, made it imperative for Merck to restructure R&D. Perlmutter can now lay claim to engineering the comeback. But you can still expect plenty of skeptical questions about how some of these therapies will perform on the market, provided they get past the FDA.

Among its late-stage prospects, Perlmutter highlighted a pair of hepatitis C drugs--MK-5172/MK-8742--which has been gaining increased attention. MK-3475, though, may well prove to be the crowning achievement in a watershed year for Merck.

At Merck, MK-3475 is more than just an experimental drug. It has to be seen as a portfolio in its own right. The program now covers 30 tumor types, both as a monotherapy and in combination with various drugs found among other Big Pharma companies. By the end of this year, the company projects that there will be 24 clinical trials underway with 6,000 patients, including four new Phase III trials.

Bristol-Myers, which had been tapped as the leader in the field, finds itself in second place

In its Q1 earnings report just days ago the big biotech said that it plans to begin a rolling submission of nivolumab in the next few days with plans to complete the NDA by the end of the year. The decision was made after investigators met with the FDA on the results of its 063 study, a Phase II trial for third-line squamous cell non-small cell lung cancer. That may be fast by most standards of modern-day drug development, but to analysts it looked like a delay, suggesting that there could be problems that are slowing studies.

Bristol-Myers, though, was stingy with details--a factor that only makes things worse for the company. The pressure to perform--or at least explain itself better--can only increase with Merck's presentation today. But on the bright side for Bristol-Myers, some analysts were expecting Merck execs to announce that they are accelerating their R&D plans for MK-3475 in lung cancer, and that didn't happen.

- here's the release from Merck on MK-3475
- here's the release on its R&D review